Question
In: Finance
A trader is interested in “closing out” a position in a futures market. What is meant...
A trader is interested in “closing out” a position in a futures market. What is meant by the phrase “closing out”? Why can a trader unilaterally close out position in a futures market while a trader cannot unilaterally close out a position in a forward agreement? Provide examples which illustrate the points you are trying to make.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Explain the advantages and disadvantages to a covered call writer of closing out the position prior...
Explain the advantages and disadvantages to a covered call writer
of closing out the position prior to expiration.
- What is the difference between a spot market and a futures market? - What is...
- What is the difference between a spot market and a futures
market?
- What is the difference between a pure risk and a speculative
risk?
Mark to market a short Eurodollar futures position with June delivery at 104.5 if daily IMM...
Mark to market a short Eurodollar futures
position with June delivery at 104.5 if daily IMM Index settlement
prices are
Day 1: 103.50
Day 2: 110
Day 3: 98.75
Day 4: 100
List the margin account balances at the end of each trading day
and specify (i) whether an additional margin is required on any
given day and, (ii) if a margin call is issued, how much must be
deposited to your margin account. Assume that the initial margin is...
1. Mark to market a long Eurodollar futures position with June delivery at 93.75 if daily...
1. Mark to market a long Eurodollar futures
position with June delivery at 93.75 if daily IMM Index settlement
prices are
Day 1: 93.90
Day 2: 93.45
Day 3: 93.24
Day 4: 93.58
Day 5: 94.00
List the margin account balances at the end of each trading day
and specify (i) whether an additional margin is required on any
given day and, (ii) if a margin call is issued, how much must be
deposited to your margin account. Assume that...
Suppose that an investor enters a long position in futures on date 0. If the futures...
Suppose that an investor enters a long position in futures on
date 0. If the futures price increases on date 1, the investor's
margin account balance will increase.
Group of answer choices
True
False
You are considering a futures position in the futures contract written on the STAR Index. This...
You are considering a futures position in the futures contract
written on the STAR Index. This is an index consisting of
technology stocks that specialise in inter-planetary travel, and
the current index level is 18,746. Assume that is possible to short
sell the index. The future value of dividends expected to be paid
over the next year is $376 and the 1-year interest rate is 4%.
d. It is also possible to trade in options contracts on the STAR
Index....
A trader takes the long position and a hedge fund takes a short position on ten...
A trader takes the long position and a hedge fund takes a short
position on ten 1-month S&P 500 futures contracts at 2500. A
single S&P 500 futures contract equals ($250) × (Index Value).
The initial margin is $325,000 and the maintenance margin is
$245,000 for both accounts. Five trading days later, the futures
price of the index drops to 2,460 triggering a margin call for the
trader. What is the change margin account balance (indicate gain or
loss) for:...
A trader takes the long position and a hedge fund takes a short position on ten...
A trader takes the long position and a hedge fund takes a short
position on ten 1-month S&P 500 futures contracts at 2500. A
single S&P 500 futures contract equals ($250) × (Index Value).
The initial margin is $325,000 and the maintenance margin is
$245,000 for both accounts. Five trading days later, the futures
price of the index drops to 2,460 triggering a margin call for the
trader. What is the change margin account balance (indicate gain or
loss) for:...
1.What is the settlement price, opening price and closing price for futures? What is open interest?...
1.What is the settlement price, opening price and closing price
for futures? What is open interest?
2.Why hedgers cannot achieve perfect hedging when using
futures?
What risk is there for holding onto a futures position in the delivery month? How does...
What risk is there for holding onto a futures position in the
delivery month? How does a trader minimize this risk?
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